The relative effects of domestic innovation and asian innovation spillovers on total factor productivity of South Africa’s manufacturing industries

We estimate the extent to which research and development (R&D) stock embodied in imports from China, South Korea, Singapore and Taiwan correlates with total factor productivity (TFP) growth of South Africa’s 22 3- digit manufacturing industries between 2002 and 2014. Using the system GMM techniq...

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Bibliographic Details
Published in:African journal of business and economic research 2018-12, Vol.13 (3), p.51-69
Main Authors: Mazorodze, Brian, Tewari, Devi Datt
Format: Article
Language:English
Subjects:
Accumulation
Asia
Capital formation
Economic growth
Economic models
Footwear industry
Foreign investment
Growth models
Human capital
Imports
Industrial research
Innovation spillovers
Innovations
Manufacturing
Manufacturing industries
Productivity
Purchasing power parity
R&D
Research & development
Research & development expenditures
Research methodology
South Africa
Total factor productivity
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Summary:We estimate the extent to which research and development (R&D) stock embodied in imports from China, South Korea, Singapore and Taiwan correlates with total factor productivity (TFP) growth of South Africa’s 22 3- digit manufacturing industries between 2002 and 2014. Using the system GMM technique, we find a positive and significant impact of Asian R&D spillovers particularly from China, Korea and Singapore on TFP growth which is in the 0.02 – 0.08% range reported in previous studies. We find this effect to increase with institutional quality and human capital accumulation. Despite the positive effect of Asian R&D spillovers however, we find domestic R&D stock to have a relatively larger effect on TFP implying that, at best, Asian innovation needs to be considered as a complement rather than a substitute for domestic R&D.
ISSN:1750-4554
1750-4562
DOI:10.31920/1750-4562/2018/v13n3a3